Boeing Faces Regulatory Hurdles as Analysts Weigh Recovery Prospects

Boeing’s stock is navigating a complex landscape of regulatory challenges and mixed analyst sentiment. After a strong rally earlier in the week that saw shares gain nearly 10%, the aerospace giant’s equity is now consolidating around the €172 mark. The primary focus for investors is the US Federal Trade Commission’s conditional approval of Boeing’s planned $8.3 billion acquisition of supplier Spirit AeroSystems, a move that introduces significant new obstacles.

Amidst the regulatory scrutiny, Boeing’s defense division has secured a substantial win. The company finalized a $4.7 billion agreement to deliver 96 AH-64E Apache attack helicopters to Poland. This represents the largest Apache order ever placed by a non-US customer. Deliveries are scheduled to commence in 2028, reinforcing a stable revenue stream for Boeing alongside its commercial aviation struggles. This contract contributes to the company’s already record-high order backlog, which stood at $636 billion at the close of the third quarter.

FTC Stipulations Demand Concessions

The Federal Trade Commission has granted approval for the Spirit AeroSystems takeover only under stringent conditions. Boeing is now required to divest certain Spirit AeroSystems assets prior to the deal's closure. Furthermore, the regulator has mandated that Boeing must continue providing services to its competitors, a direct measure intended to prevent market distortion. While reintegrating Spirit is viewed as crucial for improving Boeing’s quality control and stabilizing production, particularly for the 737 and 787 programs, these new requirements are expected to delay the acquisition's finalization and complicate its strategic benefits.

Should investors sell immediately? Or is it worth buying Boeing?

Divergent Analyst Views Emerge

Market experts are presenting a divided outlook on Boeing’s trajectory. In a recent note, Bernstein analyst Douglas Harned reaffirmed his "Outperform" rating and a $267 price target. He argued that the stock's approximate 20% correction preceding this week’s rally was an overreaction. In a separate development, Zacks Research upgraded Boeing from "Strong Sell" to "Hold," indicating a potential stabilization in market perception.

However, the underlying financial performance reveals ongoing difficulties. Boeing reported a net loss exceeding $10 billion over the past twelve months. Revenue for 2024 fell 14.5% to $66.5 billion, a consequence of production caps and labor strikes. On a more positive note, CFO Jay Malave recently projected a return to positive free cash flow by 2026, with a long-term annual target of $10 billion.

Valuation and Key Levels to Watch

An independent discounted cash flow analysis by Simply Wall St. estimates Boeing’s fair value at approximately $300 per share, suggesting the stock may currently be undervalued by more than 30%. This assessment, however, is contingent upon the company successfully meeting its production goals. In the near term, the psychologically significant $200 threshold (roughly €190) is seen as a critical technical level. A failure to hold above this point could see shares retesting recent lows.